A significant shift in emphasis is now taking place so that suppliers of software applications are keen to establish themselves as long-term partners with their customers and not just product pushers.  This is not really surprising as most product and service providers should be looking beyond the initial sale and working with clients over the long term to provide continued support through partnership.  Suppliers should be able to boast that their customers are prepared to act as references for their application, because they are a valuable partner and as part of that partnership are prepared to act as a reference. 

As an aside let us consider your own specific situation.  Please consider if you will, your own business practices when dealing with customers.  How many of your customers are prepared to provide a reference for your offering?  Is it something that is becoming more important for you and something that more and more customers require before signing a contract?  Therefore are you more focused on making sure your customers will provide references for you?  From research, the answer in most cases is ‘yes’, not surprisingly, therefore, the application providers are establishing as many of their existing customers as possible as reference companies.

Considering this whole process clinically (not cynically) it is possible to see how and why it is so important to understand the significance of the reference visit from the perspective of all the participants – you, the prospect, the supplier, and their existing customer (the reference).

The reference visit can be viewed as a real statement of intent by the vendor as it can demonstrate value and long term commitment, and a willingness to invest time and money with prospective customers and existing customers prepared to act as a reference for the vendor.  The reference personnel will tell you how they see the total package,  vendor and solution, warts and all, but do remember that the success of the reference source is a joint responsibility and results from the efforts of two parties (suppler and reference source). The software is only a part and should not be “the main attraction”.  The investment by the vendor into helping the reference company will have been undertaken because they have worked successfully together. 

As a second aside, how would your business react if a potential supplier asked for a reference from one of your existing suppliers to help them decide if they wanted your business as a customer?  Would you be able to provide a willing reference? 

The chart above highlights what is required in terms of satisfaction, to create a customer prepared to promote or be a reference for a supplier.  The concept of considering the net sum of promoters and detractors has been used by many businesses for over 10 years as a measure of customer satisfaction, and considers that the really valuable customer is one who actively promotes a supplier, by acting as a reference.  This could mean that companies begin to be more careful about who they take on as a customer, or must learn to live with the fact that it is not possible to please all of the people all of the time.  

Evidence from the research indicated in the chart is that the best position for a customer to adopt with a supplier is to be one of their references because the best customers usually get the best service, and these good customers can be easily identified as they are willing to act as a reference source for the supplier.

With that in mind, let us consider the etiquette to be followed and what can legitimately be expected from a reference visit.  Reference customers are precious to the vendor as they will have made significant investment in them.  When discussing customer service philosophy with management teams, it is useful for them to imagine they are the customer and to think about how they would feel about the service they provided.  In a similar vein, it is useful to think of yourself as the reference and analyse how you would approach a visit, and what you would expect from your guests.

It would then be helpful to consider the detailed purpose of the visit.  Reference visits require preparation (the Queen is known to do significant research so she is not caught out - she is always well informed and interested, and always treats her hosts with the utmost respect).  How much time will you have spent investigating the company you are about to visit?

My recommendation is two-fold:
* Undertake some research before the visit, including such basics as logging into their company web site, undertaking a Google search on their product, reviewing their last annual report,  and trying to reach an understanding as to why the vendor is so proud of their reference source. 
 
* During the visit the best advice is to:
go with a fully prepared check list, confirm with your hosts that you would like to take notes, explain precisely why you want to take up their precious time, demonstrate an acute awareness of the value they are providing you, and how grateful you are for their insight.

* Document the visit to ensure that all the points raised are captured and considered in a report that is made available for consideration by those unable to attend the visit and that will add value to the ongoing decision process.

Let us assume a check list has been prepared: the types of question should recognise both why you are there and why the referee is prepared to provide a reference.  Questions should not cover facts you should already know as time is limited, so the ones asked should cover aspects not already covered or provide a second opinion, or be questions that you want answered by someone other than the vendor who, naturally, has a vested interest. 

Most of the queries about the software should already have been resolved, so the reference visit should not be designed to see the software running, though it might enable you to test your interpretation of certain specific aspects and confirm whether the vendor was speaking the truth about their solution.  The real purpose of the reference visit should be to answer questions about how the vendor performs as a supplier, how they deal with customers after the first flush of enthusiasm has died down and the grind of implementation begins.  Check whether the vendor is dynamic, forward-looking, and searching to improve their solution, and working to improve their customers’ operations through the solution and by providing continuing support to their customers.

In other words, use the reference visit to validate what the vendor is saying in the sales process but what is really necessary to understand is how the vendor has performed once the contract was signed. The product must do what they say it will, but the vendor must prove to be a real partner after implementation, so their customers get value out of the product.

It will be significant who the reference company puts forward as their representative.  The people may not be from the field, indeed may be more aware of the back-office aspects of the business.  You might not be able to meet the engineers who are utilising the software every day, but then have you involved your own engineers in the referencing process - why expect something different from the reference company?  A visitor is as much on show as the vendor, so be sensitive to the possibility of feedback to the vendor.  Get the most out of the exercise and fulfil the objective of knowing whether the vendor understands their customers’ needs.  Ensure that a good relationship with a vendor is backed up with clear evidence that the solution and the past successes of the vendor bode well for a successful implementation for your own company, as ultimately you should want to be able to be a reference for the vendor in the future.

steve.downton@downtonconsulting.com              www.downtonconsulting.com